Microsoft has a habit of overpaying for its toys under Steve Ballmer, but the Skype deal still looks like good business, opening the door for the boys in Redmond in a way and with a subscriber base they simply didn’t have before. And capturing an audience that’s a hybrid of Microsoft and Apple users isn’t bad for them, either.

Microsoft already has its own cloud-based music stream in the form of Last.fm, which is also installed as an app on XBox360 (alongside facebook, twitter, netflix and hulu plus). It’s not hard to see Microsoft assembling an all-in one living room media device that does TV, movies, music and gaming along with social media and connectivity. Smart move.

There’s a clear line of demarcation emerging here, with Microsoft doing entertainment well while fumbling on search (read: bing) and Google doing search well while seeming to fumble with entertainment (with the clear exception of its acquisition of YouTube).

Google’s office suite hasn’t lit the fire I am sure it hoped it would, and its Buzz social network went nowhere. Yet their search related products, like Maps and Earth, are still the go-to source for finding stuff.